Obama says bank bailouts may require more public funds; Republicans criticize plan to spend way out of recession; world leaders urge North Korea not to fire missile; Japanese exports down 45 percent; Iran launches nuclear test-run; and more
Top of the Agenda: Obama's Economic Template
U.S. President Barack Obama laid out his plans to address the economic crisis in a much-anticipated speech to both houses of Congress yesterday, vowing to rebuild the U.S. economy and restore American influence in the world. Obama outlined his strategy to stabilize the beleaguered U.S. financial sector while also addressing longer-term economic concerns like health care and energy reform, calling it a "day of reckoning" for Washington. The president acknowledged that his efforts could lead to rising deficits in the short-term, but said the urgency of the moment outweighed those concerns. He also said that bank bailouts may require more public funds (FT), and said he understood public opposition to such measures but that government involvement would be necessary in order to keep credit flowing.
With Obama's first fiscal budget due out Thursday, many analysts are now turning to the question of what financial rescue efforts will mean for the U.S. deficit, and what this in turn might mean for the United States' position in the world. News reports have noted that Obama hopes to use cuts in war spending to reduce the U.S. budget deficit by 2013, even if his economic policies broaden it in the short-term. A new CFR.org analysis explains some of the potential threats of a high deficit, including increasing U.S. reliance on loans from other countries and increasing the risk of Washington defaulting on its international debt (though markets still peg this risk as small).
In the Republican response to Obama's speech, Louisiana's Governor Bobby Jindal criticized the idea of the United States spending its way out of recession. Jindal praised Obama's presidency as "a great moment in the history of our republic," but said that an era of big government is not the answer to current economic problems. "The strength of America is not found in our government," Jindal said. "It is found in the compassionate hearts and the enterprising spirit of our citizens."
Meanwhile, the Wall Street Journal reports new signs have emerged that the financial crisis and recession are feeding one another, potentially undermining U.S. Fed Chairman Ben Bernanke's goal of an economic recovery by 2010.
PACIFIC RIM: Aso, Obama Address Pyongyang
Meeting yesterday in Washington, Japanese Prime Minister Taro Aso and U.S. President Barack Obama both urged (Asahi) North Korea not to aggravate tensions on the Korean peninsula by test-firing a long-range ballistic missile, as intelligence reports indicate Pyongyang is preparing to do.
Yonhap reports Chinese officials are expected to make similar statements after meetings today with South Korean officials in Beijing.
JAPAN: The BBC reports Japanese exports fell over 45 percent in January 2009 compared with a year prior, bringing the countries exports to their lowest level in a decade and the gap between exports and imports to its widest level since 1980.